US open: Stocks head south ahead of latest Federal Reserve minutes

Wall Street started off on the back foot on Wednesday following the solid gains seen in the previous session, as investors awaited the release of the latest Federal Reserve meeting minutes.

As of 1540 BST, the Dow Jones was 0.91% lower at 25,562.60, while the S&P 500 had dropped 0.66 to 2,791.38 and the Nasdaq was trading 0.60% softer at 7,599.85.

Stocks on Wall Street headed south in early trade following a surge on Tuesday, with the Dow and S&P ending up 2.2% and the tech-heavy Nasdaq closing up 2.9% as investors welcomed upbeat earnings from the likes of Goldman Sachs, Morgan Stanley and Johnson & Johnson.

Netflix shares climbed 6.35% in early trading after the company topped third-quarter estimates for subscriber growth and earnings overnight.

CMC Markets analyst Michael Hewson said: "Having made the mistake of overestimating subscriber growth numbers in Q2, and missing by 1m it would appear that management erring on the side of caution for Q3 has seen the opposite happen, as the company added a record 6.96m new subscribers in Q3 well above the 5m expected."

"Profits also surged coming in at $0.89c a share well above the $0.68c expected, while revenues came in as expected at $4bn. The beat on profits was helped by an increase in operating margins to 12%, as well as a tax benefit on repatriated foreign earnings."

IBM, which also turned in its third-quarter results overnight, slumped 6.92% after the company posted a bigger-than-expected decline in third-quarter revenue.

Elsewhere, motorhome manufacturer Winnebago racked up 6.52% at the bell after the release of its fourth-quarter earnings.

On the data front, US housing starts fell by more-than-expected last month, dragged lower by those for homes containing five or more family units.

According to the Department of Commerce, housing starts declined at a 5.3% month-on-month clip in September to reach an annualised rate of 1.201m, short of the 1.218m reading forecast by economists.

August's print was revised lower as well, from a preliminary reading of 1.282m to 1.268m.

Single-family housing starts declined by 0.9% on the month to 871,000, but multi-family starts were off by 12.9% at 324,000.

Building permits, a closely-watched lead indicator of activity in the sector, also fell back, shrinking by 0.6% to 1.241m (consensus: 1.280m), and were left standing 1.0% below their level in September 2017.

Elsewhere, FOMC minutes were still to come at 1900 BST.

Oanda analyst Craig Erlam said: "Considering the fact that a major contributor to the sell-off appeared to be rising US bond yields - which have come off as risk appetite has returned - today's FOMC minutes should be very interesting."

"Given the events of the last couple of weeks, there is a chance that the minutes are a little outdated, but that won't stop people pouring over them for clues about where exactly we are in the tightening cycle and how much further there is to go."